To:
RNS
Date:
12 September 2018
From:
F&C Commercial Property Trust Limited
LEI:
213800A2B1H4ULF3K397
(Classified Regulated Information,
under DTR 6 Annex 1 Section 1.2)
Interim Report for the Period ended
30 June 2018
Highlights
· Share price total return of 13.2
per cent for the six months*
· 3.6 per cent net asset value
total return*
· Maintained annualised dividend
at 6.0 pence per share giving a yield
of 4.0 per cent on the period end share price*
* See Alternative Performance Measures
Chairman’s Statement
Performance for the period
The share price total return to shareholders over the six-months
to 30 June 2018 was 13.2* per cent.
The share price at the period end was150.6p, representing a premium
of 5.2* per cent to the NAV per share of 143.2p.
The net asset value total return over the six months was 3.6 per
cent. The following table provides an analysis of the movement in
the NAV per share for the period:
|
Pence |
NAV per share as at 31 December
2017 |
141.2 |
Unrealised increase in valuation of
direct property portfolio |
2.6 |
Other net revenue |
2.4 |
Dividends paid |
(3.0) |
NAV per share as at 30 June
2018 |
143.2 |
The total return from the underlying portfolio, including rents
net of direct property costs, was 3.6* per cent, compared with the
total return of 3.7* per cent from the MSCI Investment Property
Databank (‘IPD’) Quarterly Universe (‘the Benchmark’). 1.5
percentage points of this return was attributable to capital growth
which was in line with the capital return recorded by IPD. The
strongest absolute returns during the period were experienced in
the alternative and office sectors, the latter primarily due to
successful new lettings and ongoing capital initiatives. The
longer-term performance of the portfolio remains above average over
five and ten years.
In the retail sector, St. Christopher’s Place Estate continues
to benefit from the high number of completed and ongoing
initiatives undertaken during the period. The Company benefits from
having little exposure to traditional high street retail and no
shopping centres. However, on the negative side, the Company has
experienced a number of Company Voluntary Arrangements (‘CVAs’) and
administrations over the period, which has had some impact on our
retail parks in Newbury and
Solihull. These are popular
retailer destinations and the Manager is taking positive steps
towards mitigating any impact that CVAs may have had.
While the focus has continued to be on asset management
initiatives within the existing portfolio, the Company purchased an
industrial unit and adjoining land in Liverpool for £5.1 million. The Company has
entered into a forward commitment to acquire a warehouse to be
constructed on completion of the works at an additional sum of £3.4
million. There is significant demand for quality buildings in the
logistics sector in this region and this investment provides the
Company with an opportunity to generate sustainable, quality,
long-term income.
Borrowings
The Group’s available borrowings comprise a £260 million term
loan with Legal & General Pensions Limited, maturing on
31 December 2024, and both a £50
million term loan facility and an undrawn £50 million revolving
credit facility with Barclays, available until June 2021. The Group’s net gearing, was 20.2* per
cent at the end of the period. The weighted average interest rate
on the Group’s total current borrowings is 3.3 per cent.
Dividends and Dividend Cover
Monthly interim dividends of 0.5p per share continued to be paid
during the period, maintaining the annual dividend of 6.0p per
share since 2006 and providing a dividend yield of 4.0* per cent
based on the period-end share price. Barring
unforeseen circumstances, your Board intends that dividends will
continue to be paid monthly at the same rate.
The Company’s level of dividend cover for the period (excluding
capital gains on properties) was 79.2* per cent which was broadly
in line with the equivalent period last year (80.6* per cent). In
comparing these, rental income levels have increased, helped
significantly by the purchase of One Cathedral Square, Bristol in December
2017. However, this was offset by an increased level of
expenses, with the majority of that increase attributable to a
one-off payment to a tenant as an incentive for them to vacate a
property early. The level of tax payable in the current period
increased further as taxable losses were fully utilised in three
subsidiaries of the Group.
REIT Conversion
As highlighted in the 2017 Annual Report, the Board has been in
consultation with its tax advisors regarding the tax affairs of the
Group. The Group is now paying a rising level of taxation and this
will increase substantially following the UK Government’s decision
to bring non-resident landlords into the corporation tax regime,
effective April 2020.
In light of the current and continuing increase in corporate
tax, and following a review of the current structure of the group,
it has been determined that change is necessary. Accordingly, it is
proposed that the Company takes the necessary steps to achieve UK
Real Estate Investment Trust (‘REIT’) status. Subject to the
passing of certain resolutions to update its Articles of
Incorporation at a General Meeting, and satisfying the necessary
HMRC conditions, the intention is to serve notice to HMRC for entry
to the REIT regime with effect from 1 April
2019.
Board Composition
Over the years we have implemented a carefully orchestrated
evolution of the Board, combining a degree of continuity with
gradual change. This has ensured an appropriate balance of skills,
experience, and of personalities who have provided constructive
challenge to the management of your Company.
In continuing this programme of refreshment, I am delighted to
welcome John Wythe as a new member
of the Board. John brings considerable experience of the property
market, most recently, among other positions, as director then
chairman of the Trustees of The Portman Estate Ltd following a long
career with Prudential Property Investment Managers Ltd, now
M&G Real Estate.
Further proposed Board changes will be announced early in the
new year together with detailed proposals for conversion to REIT
status.
Outlook
The property market has delivered a solid performance in the
first six months of 2018. Future performance could be affected by
the economic and political uncertainties surrounding Brexit as the
March 2019 deadline approaches.
Forecast modest economic growth and a gradual move to a regime of
higher interest rates will also play a role.
With the scope for further yield compression being limited,
total returns are now expected to be driven by income.
Well-specified and well-let assets in established and emerging
locations are likely to out-perform against this backdrop.
Notwithstanding the short-term pressures in the retail sector,
the Company has a well-positioned and resilient portfolio. The
priority continues to be to invest in and complete asset management
initiatives within the portfolio and to capitalise on external
opportunities to provide sustainable long-term rental income.
Chris
Russell
Chairman
* See Alternative Performance
Measures
Performance Summary
|
Half year ended 30
June 2018 |
|
|
Total Returns for the period
* |
|
|
|
Net asset value per share |
3.6% |
|
|
Ordinary Share price |
13.2% |
|
|
Portfolio |
3.6% |
|
|
MSCI Investment Property Databank
(‘IPD’) Quarterly Universe (‘the Benchmark’) |
3.7% |
|
|
FTSE All-Share Index |
1.7% |
|
|
|
|
|
|
|
Half year ended 30
June 2018 |
Year ended
31 December 2017 |
% change |
Capital Values |
|
|
|
Total assets less current
liabilities (£’000) |
1,454,734 |
1,438,397 |
1.1 |
Net asset value per share |
143.2p |
141.2p |
1.4 |
Ordinary Share price |
150.6p |
135.9p |
10.8 |
FTSE All-Share Index |
4,202.25 |
4,221.82 |
(0.5) |
Premium/(Discount) to net asset
value per share* |
5.2% |
(3.8)% |
|
Net Gearing * |
20.2% |
19.6% |
|
|
|
|
|
|
Half year ended 30
June 2018 |
Half year
ended 30 June 2017 |
|
Earnings and Dividends |
|
|
|
Earnings per Ordinary Share |
5.0p |
6.9p |
|
Dividends per Ordinary Share |
3.0p |
3.0p |
|
Annualised dividend yield * |
4.0% |
4.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sources: F&C Investment Business, MSCI Investment Property
Databank (‘IPD’) and Thomson Reuters Eikom.
* See Alternative Performance Measures |
Managers’ Review
Property highlights over the
period
• 6-month total return of 3.6* per cent. The Company maintains
outperformance against the IPD Benchmark over a five and ten-year
time horizon.
• Acquired industrial property known as Hurricane 47 at Estuary
Business Park in Liverpool, as
well as the adjoining land for the forward purchase of another
newly constructed industrial warehouse.
• Agreed a new 16-year lease with Diageo to occupy the entire
former HSBC office building on Edinburgh Park.
Property Market Review
The market total return for the six months to 30 June 2018, as measured by the MSCI Investment
Property Databank (‘IPD’) Quarterly Universe (‘the Benchmark’) was
3.7 per cent, continuing the positive performance seen since
late-2016. Capital values increased by 1.5 per cent in the six
months to June 2018. The income
return was 2.2 per cent and rental growth was 0.5 per cent.
Key Benchmark Metrics –
All Property |
|
Jan-June
2018
% |
Jan-June
2017
% |
Total Returns |
3.7 |
4.6 |
Income Return |
2.2 |
2.3 |
Capital Return |
1.5 |
2.3 |
Open Market Rental Value Growth |
0.5 |
1.0 |
Initial Yield |
4.5 |
4.8 |
Equivalent Yield |
5.5 |
5.7 |
Source: MSCI Inc
The economy has delivered positive but muted growth. Inflation
remained above target during the period. Monetary policy and
interest rates were unchanged in the reporting period, following
the increase in official rates in November
2017, although the base rate was increased to 0.75 per cent
in August 2018. Gilt yields have
remained low, finishing the period at 1.4 per cent, although have
shown some growth following the historic lows in Q3 2016. The
Brexit negotiations and the disunity within the government
continued to dominate the political agenda, and concerns regarding
a weakening in global growth prospects and the advance of
protectionism globally are increasing.
Some caution has entered the market with investment activity
lower than in the same period of 2017, however, pricing has
remained competitive leading to strong capital growth over the
period save for the retail sector. Activity was supported by some
large purchases by overseas investors, although this group has also
been selectively selling stock. Institutional net investment in
property has improved largely due to a reduced level of sales. The
property yield gap against ten-year gilts has remained attractive
by historic standards and the challenge for many investors has been
the lack of suitable supply. In particular, prime assets and long
income remained in favour but their lack of availability has
encouraged investors to increasingly look to the alternative
sectors, such as hotels and student housing, which are
characterised by longer leases.
CBRE market data showed yields broadly stable but hardening for
standard industrials and weakening for shopping centres and some
retail warehousing. Rental growth has remained muted across the
Benchmark but has been strong in the industrial sector. Rental
growth was negative for high street retail, shopping centres,
retail warehousing, and also for West End offices. We see this
trend continuing in the retail sector in the short-term.
The period was notable for the increased number of business
failures, administrations and rationalisations in the retail
sector. As a result, total returns were a modest 1.1 per cent in
the six-month period, intensifying a prolonged period of
under-performance against the all-property average. Central London retail was relatively resilient
but regional shops and shopping centres struggled. As retailers
rationalise, many high streets and shopping centres are now too
large for the thinning occupier markets, resulting in a downward
pressure on rents. The offices sector delivered 3.2 per cent helped
by investment demand for City offices and a search for yield in
some regional office markets. We have also started to see some
rental growth coming through in strong regional centres as
occupiers increasingly move to urban centres characterised by a
broad cultural offering, good transport infrastructure and
amenities. Performance at the all-property level continued to be
driven by strength in the industrials market which recorded total
returns of 9.0 per cent, with standard industrials out-performing
distribution warehousing. Alternatives are growing in popularity
with investors, and registered a 3.9 per cent total return.
The UK commercial property market continued to deliver a solid
performance compared to long-term trends, underpinned by its income
return with some capital growth. There is however, considerable
polarisation between sectors with industrials
pulling further ahead and retail generally struggling. Despite
economic and political uncertainties forecasts remain stable.
However, the prospect of higher interest rates and some economic
headwinds mean that real estate markets may have reached a plateau
and returns are likely to be subdued compared to the highs of
recent years.
Valuation and Portfolio
Total Portfolio
Performance |
|
30 June
2018 |
Year ended
31 December
2017 |
No of properties |
38 |
37 |
Valuation (£’000) |
1,450,035 |
1,418,612 |
Average Lot Size (£’m) |
38.2 |
38.3 |
|
Six months to 30 June 2018 |
Portfolio
(%) |
Benchmark
(%) |
Capital Return* |
1.5 |
1.5 |
Income Return* |
2.1 |
2.2 |
Total Return* |
3.6 |
3.7 |
Source: BMO REP Asset Management plc, MSCI Inc
The total return from the portfolio over the period was 3.6* per
cent (64th percentile) compared with the Benchmark return of 3.7
per cent. The portfolio has delivered a strong track record of
longer-term performance: upper quartile over five and top quartile
over ten years.
Geographical Analysis (% of total property portfolio) |
|
30 June 2018
(%) |
South East |
24.8 |
London – West End |
34.4 |
Eastern |
2.0 |
Midlands |
12.3 |
Scotland |
11.9 |
North West |
11.0 |
Rest of London |
1.4 |
South West |
2.2 |
Source: BMO REP Asset Management
plc
Sector
Analysis (% of total property portfolio) |
|
30 June 2018
(%) |
Offices |
36.7 |
Retail |
30.6 |
Retail Warehouses |
12.5 |
Industrial |
17.2 |
Other |
3.0 |
Source: BMO REP Asset Management
plc
Income Analysis
The portfolio benefits from a highly secure income stream. The
current void rate excluding developments and refurbishments is 6.9*
per cent. The vacancies present an opportunity and progress is
currently being made in attracting new secure tenants to the
portfolio.
Lease
Expiry Profile |
At 30 June
2018 the weighted average lease length for the portfolio, assuming
all break options are exercised, was 7.0 years |
% of leases expiring
(weighted by rental value) |
30 June 2018
(%) |
31 December 2017
(%) |
0 – 5 years |
45.3 |
46.9 |
5 – 10 years |
28.5 |
27.3 |
10 – 15 years |
20.2 |
15.6 |
15 – 25 years |
6.0 |
10.2 |
Source: BMO REP Asset Management
plc
Covenant
Strength (% of income by risk bands) |
|
30 June 2018
(%) |
Unscored and
ineligible |
6.0 |
Maximum |
11.7 |
High |
1.7 |
Medium to High |
2.4 |
Low to Medium |
4.2 |
Low |
22.6 |
Negligible and
Government |
51.4 |
Source: IRIS Report, MSCI Inc
Retail
Retail Portfolio
Performance |
|
30 June
2018 |
Year ended
31 December
2017 |
No of properties ** |
8 |
8 |
Valuation (£’000) |
624,550 |
626,400 |
|
Six months to 30 June 2018 |
Portfolio
(%) |
Benchmark
(%) |
Retail Capital Return* |
(0.6) |
(1.4) |
Retail Income Return* |
2.1 |
2.5 |
Retail Total Return* |
1.5 |
1.1 |
Source: BMO REP Asset Management plc, MSCI Inc
** St Christopher’s Place is regarded
as 1 investment which comprises 44 individual properties.
The overall total return from the Company’s retail properties
during the period was 1.5* per cent, outperforming the Benchmark
return of 1.1 per cent. The sector is the weakest performer in the
Benchmark and the Company’s relative outperformance is largely due
to its’ lack of exposure to shopping centres.
St Christopher’s Place
St. Christopher’s Place Estate performed steadily over the
period producing a total return of 2.3* per cent. The asset
continues to benefit from the high number of completed and ongoing
initiatives undertaken during the period. At 30-34 James Street the
new letting to Caprice Holdings has now completed for a term of 20
years and above anticipated rental value. The tenant will trade as
‘Harry’s Bar’ and is due to open in the autumn following the
fit-out program.
We have seen tenants Carluccios and Aldo enter Company Voluntary
Arrangements (‘CVAs’), although in both cases their units at St.
Christopher’s Place were classified as ‘category 1’ assets and
therefore the headline rents were unaffected.
Other Retail
The sector has experienced a concentrated period of CVAs and
administrations over the period as a number of retailers have felt
the effect of the structural change in shopping habits and
operational challenges. Our retail parks in Newbury and Solihull have felt some of the impact of this
with New Look and Mothercare entering CVAs, Poundworld entering
administration and Homebase also undertaking a CVA post period-end.
Although it is a challenging environment, the assets remain popular
retailer destinations and the Manager is already in a number of
well advanced negotiations to refurbish, reconfigure and re-let the
units where appropriate. A priority for the Company will be to
manage these risks in the immediate
term.
Following completion of the sub-division works of Unit 14 at
Newbury we welcome Starbucks and
Mountain Warehouse to the park having now opened their new stores.
Starbucks (operating under franchisee 23.5 Degrees Ltd) have taken
a 15-year lease, with tenant break option at year 10, whilst
Mountain Warehouse have taken a 10-year lease with a break at year
6. Both lettings demonstrate the ongoing retailer demand at this
property.
Offices
Offices Portfolio
Performance |
|
30 June
2018 |
Year ended
31 December
2017 |
No of properties |
17 |
17 |
Valuation (£’000) |
532,210 |
513,562 |
|
Six months to 30 June 2018 |
Portfolio
(%) |
Benchmark
(%) |
Offices Capital Return* |
3.1 |
1.2 |
Offices Income Return* |
1.8 |
1.9 |
Offices Total Return* |
5.0 |
3.2 |
Source: BMO REP Asset Management plc, MSCI Inc
The total return from the office portfolio was 5.0* per cent
compared to the Benchmark total return of 3.2 per cent.
The Rest of UK Offices have benefitted from yield compression in
the major markets and the portfolio has witnessed some significant
asset management progress in letting the vacant building on
Edinburgh Park to Diageo as their new Scottish headquarters. Diageo
have entered into a new 16-year lease with tenant break at year 10,
off the headline rent of £21 per square foot. The property is
currently being comprehensively refurbished at a capex spend of
£6.5 million and the works are due to complete in February 2019.
In Central London the
refurbishment of the remaining floors in Cassini House, St James’
Street, SW1 has completed and we expect to have these let shortly.
Nearby, 2-4 King Street, SW1 is now fully let. The leasing success
as a result of these refurbishment programs has contributed to West
End Offices significantly outperforming the Benchmark over the
quarter.
Industrial & Logistics
Industrial &
Logistics Portfolio Performance |
|
30 June
2018 |
Year ended
31 December
2017 |
No of properties |
12 |
11 |
Valuation (£’000) |
249,775 |
239,350 |
|
Six months to 30 June 2018 |
Portfolio
(%) |
Benchmark
(%) |
Industrial & Logistics Capital
Return* |
2.0 |
6.6 |
Industrial & Logistics Income
Return* |
2.6 |
2.2 |
Industrial & Logistics Total
Return* |
4.6 |
9.0 |
Source: BMO REP Asset Management plc, MSCI Inc
The industrial and logistics portfolio delivered a total return
of 4.6* per cent compared with the Benchmark total return of 9.0
per cent. The strong performance of the sector was once again
driven by capital growth as valuation yields continue to
reach unprecedented lows. This is primarily seen in South East
industrial where capital growth during the period was 8.3 per cent.
The industrial and logistics portfolio has underperformed the
Benchmark as it is underweight South East industrials and its main
exposure to the sector is maintained through mid to large size
logistics and not to multi-let industrial estates which experienced
the most marked re-rating of pricing. However, we see the recent
levels of capital growth slowing in the short-term and a return to
income returns with the strength of occupational markets driving
long-term sustainable returns.
There were no significant lease events or asset management
activities over the period. The Company owns a logistics unit at
DIRFT, Daventry which is let to
Mothercare having renewed their lease last year at a rent of £1.8
million per annum. As already reported, Mothercare undertook the
CVA during the period but this property was not included in the CVA
and the rent and lease terms remain unchanged.
Industrial Purchase
The Company completed the purchase of Hurricane 47, Estuary
Business Park, Liverpool for
£3.995 million as well as an adjoining site of 3.6 acres with
planning consent for the construction of a 52,000 sq.ft. unit for
£1.080 million. Hurricane 47 comprises a 47,462 sq.ft.
speculatively developed building, which achieved practical
completion in April 2018 and is
constructed to a high specification. Hurricane 47 is now being
formally marketed to secure an occupier. The Company has entered
into a forward commitment to acquire the warehouse to be
constructed on completion of the works at an additional sum of
£3.382 million. The Company already has an existing property on
Estuary Business Park having acquired a warehouse let to Adient
Seating in April 2014. The investment
provides the Company with an opportunity to generate sustainable
income and to benefit from the lack of supply for new modern
buildings and strong occupier demand, both of which are driving up
rents in the logistics sector.
Industrial Sale
It has previously been reported that the Company has
conditionally exchanged contracts to sell the former Ozalid Works
in Colchester to Persimmon Homes.
Progress is being made on negotiating and securing a revised
planning consent and it is hoped this will be secured by Persimmon
Homes in the autumn which will discharge the conditionality of the
sale.
The Alternative Property Sector
The student accommodation block in Winchester produced a total
return of 12.6* per cent. This strong performance is attributable
to the annual RPI linked rental increase being agreed at 3.4 per
cent and a further yield compression for long let, inflationary
hedged assets in the alternative sector.
Outlook
The market is expected to deliver positive total returns but
with some deceleration from the pace of the recent past. The
outlook for property continues to be strongly influenced by the
Brexit negotiations and we would expect investors to remain
cautious, especially as the October
2018 negotiations and March
2019 Brexit deadline approach. The market is anticipating
further interest rate rises, and although they are expected to be
slow and gradual and the yield gap is currently favourable, this
could affect property pricing over the longer-term.
The outlook for retail property has deteriorated as it faces
major structural issues. Retailers are having to adjust their
occupational strategies in face of changing consumer habits, which
will continue to provide challenges to Landlords in the short-term.
Leasing strategies have moved from opportunistic to a more
defensive income preservation focus but this will settle over time
as we reach a more stable equilibrium between physical and online
retail. As holders of core assets in prime locations the portfolio
is well positioned in this regard.
There are growing concerns about the level of pricing in some
parts of the market such as industrial, where yields have reached
historically low levels, and City offices, where the occupational
market may be weaker in the medium-term. These sub-sectors may see
some readjustment in pricing if there is some cooling in real
estate capital markets. Despite some uncertainty, the economy is
forecast to remain resilient in the near term and we expect real
estate to deliver stable and positive total returns, driven by a
strong income return.
As highlighted in the 2017 annual report, the Company has a
prime, well balanced portfolio and the focus remains on asset
management initiatives apparent in the portfolio and reducing
exposure to voids.
Richard Kirby and Matthew Howard
Fund Managers
BMO REP Asset Management plc
*See Alternative Performance Measures
Responsible Property Investment
Highlights for the period to 30 June
2018
• Long-term target adopted to reduce energy consumption by 20%
per m2 by 2031 against a 2016 baseline.
• Asset-specific energy reduction targets established for
2017-18 ranging from 2.7% to 4.0%.
• 17% reduction in greenhouse gas emissions between 2016 and
2017 on a like-for-like basis.
• 0% of rental income attributed to organisations associated
with the production, storage, distribution or use of Controversial
Weapons.
• GRESB 2018 Survey and CDP General Climate module questionnaire
submitted.
The Company has further advanced the implementation of its
Responsible Property Investment (‘RPI’) Strategy over the period,
with material progress made in a number of key areas.
A separate RPI Report is being prepared for the Company for the
first time and will be available on the Company website soon. The
RPI Report will include disclosure of environmental, social and
governance (‘ESG’) performance data in accordance with the
sustainability Best Practice Recommendations published by
EPRA1. The Report will show a number of variable
performance trends, including an increase in like-for-like
electricity consumption, a reduction in fuel consumption for
heating and, notably, a 17% reduction in greenhouse gas emissions
between 2016 and 2017.
Verco Advisory Services Limited was engaged to advise on the
establishment of a long-term target for reducing energy consumption
across the portfolio, using a methodology consistent with the goal
of the Paris Agreement on Climate Change to limit global warming to
less than 2°C above pre-industrial levels. The Manager has agreed
to adopt a target of reducing the energy intensity of the portfolio
by 20% per square meter by 2031, against a 2016 baseline.
This target exceeds the science-based Sectoral Decarbonisation
Approach pathway and has been used to frame the establishment of
asset-specific energy reduction targets for 2017-18, which range
from 2.7% to 4.0%.
In addition, a portfolio-wide water use reduction target has
been set for the year of 1% for directly managed assets, whilst
efforts continue to be made to improve the collection of waste
data.
The Company monitors its tenant mix as part of its commitment to
minimising its leasing exposure to organisations connected to the
production, storage, distribution or use of Controversial
Weapons2. At the period ending 30
June 2018, 0% (zero percent) of rental income was attributed
to organisations that appear on the exclusions list managed by BMO
Global Asset Management.
The Company has submitted its response to the 2018 Survey of the
Global Real Estate Sustainability Benchmark (GRESB), for which the
results of all participants will be released in September 2018. The CDP General Climate module
questionnaire has also been completed, ahead of the target date set
by the Board in the 2017 Annual Report & Accounts.
1. European Public Real Estate Association.
2. Including cluster munitions, anti-personnel mines
and biochemical weapons as covered by the 1972 Biological and Toxic
Weapons Convention, the
1997 Chemical Weapons Convention, the 1999 Anti-Personnel Mine
Ban Convention, and the 2008 Convention on Cluster Munitions.
F&C Commercial
Property Trust Limited
Condensed Consolidated Statement
of Comprehensive Income (unaudited)
for the six months to 30 June 2018
Notes |
Six months |
Six months |
Year to |
|
|
to 30 June |
to 30 June |
31
December |
|
|
2018 |
2017 |
2017* |
|
|
£‘000 |
£‘000 |
£‘000 |
Revenue |
|
|
|
|
Rental income |
|
32,638 |
31,697 |
64,775 |
Gains / (losses) on investments
properties |
|
|
|
|
Unrealised gains on revaluation of
investment properties |
5 |
20,971 |
35,502 |
52,854 |
Loss on sale of investment
properties realised |
5 |
- |
(5) |
(5) |
Total
income |
|
53,609 |
67,194 |
117,624 |
|
|
|
|
|
Expenditure |
|
|
|
|
Investment management fee |
|
(3,876) |
(3,750) |
(7,692) |
Other expenses |
3 |
(3,461) |
(2,699) |
(5,659) |
Total expenditure |
|
(7,337) |
(6,449) |
(13,351) |
|
|
|
|
|
Operating profit before finance
costs and taxation |
|
46,272 |
60,745 |
104,273 |
|
|
|
|
|
Net finance costs |
|
|
|
|
Interest receivable |
|
6 |
- |
72 |
Finance costs |
|
(5,450) |
(5,445) |
(10,932) |
|
|
(5,444) |
(5,445) |
(10,860) |
|
|
|
|
|
Profit before
taxation |
|
40,828 |
55,300 |
93,413 |
Taxation |
|
(871) |
(465) |
(703) |
Profit for the period |
|
39,957 |
54,835 |
92,710 |
|
|
|
|
|
Other comprehensive
income |
|
|
|
|
Items that are or
may be reclassified subsequently to profit
or loss |
|
|
|
|
Movement in fair value of effective
interest rate swaps |
|
315 |
285 |
457 |
Total comprehensive
income for the period |
|
40,272 |
55,120 |
93,167 |
|
|
|
|
|
Basic and diluted earnings per
share |
4 |
5.0p |
6.9p |
11.6p |
All of the profit and total comprehensive income for the period
is attributable to the owners of the Group.
All items in the above statement derive from continuing
operations.
* These figures are audited.
F&C Commercial
Property Trust Limited
Condensed Consolidated Balance
Sheet (unaudited)
as at 30 June
2018
|
Notes |
30 June
2018
£’000 |
30 June
2017
£’000 |
31 Dec
2017*
£’000 |
Non-current assets |
|
|
|
|
Investment properties |
5 |
1,429,277 |
1,344,519 |
1,398,894 |
Trade and other receivables |
|
19,394 |
18,716 |
20,734 |
Interest rate swap |
|
55 |
- |
- |
|
|
1,448,726 |
1,363,235 |
1,419,628 |
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables |
|
5,067 |
3,466 |
3,288 |
Cash and cash equivalents |
|
19,933 |
74,995 |
35,156 |
|
|
25,000 |
78,461 |
38,444 |
|
|
|
|
|
Total assets |
|
1,473,726 |
1,441,696 |
1,458,072 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
(17,608) |
(16,959) |
(18,936) |
Taxation payable |
|
(1,384) |
(587) |
(739) |
|
|
(18,992) |
(17,546) |
(19,675) |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Trade and other payables |
|
(1,947) |
(1,624) |
(1,812) |
Interest-bearing loans |
|
(307,846) |
(307,510) |
(307,675) |
Interest rate swaps |
|
- |
(432) |
(260) |
|
|
(309,793) |
(309,566) |
(309,747) |
|
|
|
|
|
Total liabilities |
|
(328,785) |
(327,112) |
(329,422) |
|
|
|
|
|
Net assets |
|
1,144,941 |
1,114,584 |
1,128,650 |
|
|
|
|
|
|
|
|
|
|
Represented by: |
|
|
|
|
Share capital |
6 |
7,994 |
7,994 |
7,994 |
Share premium |
|
- |
127,612 |
- |
Special reserves |
|
589,593 |
465,039 |
589,593 |
Capital reserves |
|
436,474 |
398,151 |
415,503 |
Hedging reserve |
|
55 |
(432) |
(260) |
Revenue reserve |
|
110,825 |
116,220 |
115,820 |
|
|
|
|
|
Equity shareholders’
funds |
|
1,144,941 |
1,114,584 |
1,128,650 |
|
|
|
|
|
|
|
|
|
|
Net asset value per
share |
7 |
143.2p |
139.4p |
141.2p |
* These figures are audited.
F&C Commercial
Property Trust Limited
Condensed Consolidated Statement
of Changes in Equity (unaudited)
for the six months to 30 June 2018
|
|
Share
Capital
£’000 |
Share Premium
£’000 |
Other
Reserves
£’000 |
Capital
Reserves
£’000 |
Hedging Reserve
£’000 |
Revenue
Reserve
£’000 |
Total
£’000 |
|
Notes |
|
|
|
|
|
|
|
At 1 January 2018 |
|
7,994 |
- |
589,593 |
415,503 |
(260) |
115,820 |
1,128,650 |
Total comprehensive income for the period |
|
|
|
|
|
|
|
|
Profit for the
period |
|
- |
- |
- |
- |
- |
39,957 |
39,957 |
Movement in fair value
of interest rate swap |
|
- |
- |
- |
- |
315 |
- |
315 |
Transfer in respect
of unrealised gains on investment properties |
5 |
- |
- |
- |
20,971 |
- |
(20,971) |
- |
Total comprehensive
income for the period |
|
- |
- |
- |
20,971 |
315 |
18,986 |
40,272 |
Transactions with
owners of the Company recognised directly in equity |
|
|
|
|
|
|
|
|
Dividends paid |
2 |
- |
- |
- |
- |
- |
(23,981) |
(23,981) |
|
|
|
|
|
|
|
|
|
At 30 June 2018 |
|
7,994 |
- |
589,593 |
436,474 |
55 |
110,825 |
1,144,941 |
F&C Commercial
Property Trust Limited
Condensed Consolidated Statement
of Changes in Equity (unaudited)
for the six months to 30 June 2017
|
|
Share
Capital
£’000 |
Share Premium
£’000 |
Special
Reserves
£’000 |
Capital
Reserves
£’000 |
Hedging Reserve
£’000 |
Revenue
Reserve
£’000 |
Total
£’000 |
|
Notes |
|
|
|
|
|
|
|
At 1 January 2017 |
|
7,994 |
127,612 |
461,981 |
362,654 |
(717) |
123,921 |
1,083,445 |
Total comprehensive income for the period |
|
|
|
|
|
|
|
|
Profit for the
period |
|
- |
- |
- |
- |
- |
54,835 |
54,835 |
Movement in fair value
of interest rate swaps |
|
- |
- |
- |
- |
285 |
- |
285 |
Transfer in respect
of unrealised gains on investment properties |
5 |
- |
- |
- |
35,502 |
- |
(35,502) |
- |
Losses on sale of
investment properties realised |
5 |
- |
- |
- |
(5) |
- |
5 |
- |
Transfer from
special reserve |
|
- |
- |
3,058 |
- |
- |
(3,058) |
- |
Total comprehensive
income for the period |
|
- |
- |
3,058 |
35,497 |
285 |
16,280 |
55,120 |
Transactions with
owners of the Company recognised directly in equity |
|
|
|
|
|
|
|
|
Dividends paid |
2 |
- |
- |
- |
- |
- |
(23,981) |
(23,981) |
|
|
|
|
|
|
|
|
|
At 30 June 2017 |
|
7,994 |
127,612 |
465,039 |
398,151 |
(432) |
116,220 |
1,114,584 |
F&C Commercial
Property Trust Limited
Condensed Consolidated Statement
of Changes in Equity
for the year to 31 December 2017*
|
|
Share
Capital
£’000 |
Share Premium
£’000 |
Special
Reserves
£’000 |
Capital
Reserves
£’000 |
Hedging Reserve
£’000 |
Revenue
Reserve
£’000 |
Total
£’000 |
|
Notes |
|
|
|
|
|
|
|
At 1 January 2017 |
|
7,994 |
127,612 |
461,981 |
362,654 |
(717) |
123,921 |
1,083,445 |
Total comprehensive income for the year |
|
|
|
|
|
|
|
|
Transfer to Special
Reserve |
|
- |
(127,612) |
127,612 |
- |
- |
- |
- |
Profit for the
year |
|
- |
- |
- |
- |
- |
92,710 |
92,710 |
Movement in fair value
of interest rate swaps |
|
- |
- |
- |
- |
457 |
- |
457 |
Transfer in respect
of unrealised gains on investment properties |
5 |
- |
- |
- |
52,854 |
- |
(52,854) |
- |
Losses on sale of
investment properties realised |
5 |
- |
- |
- |
(5) |
- |
5 |
- |
Total comprehensive
income for the year |
|
- |
(127,612) |
127,612 |
52,849 |
457 |
39,861 |
93,167 |
Transactions with
owners of the Company recognised directly in equity |
|
|
|
|
|
|
|
|
Dividends paid |
2 |
- |
- |
- |
- |
- |
(47,962) |
(47,962) |
|
|
|
|
|
|
|
|
|
At 31 December 2017 |
|
7,994 |
- |
589,593 |
415,503 |
(260) |
115,820 |
1,128,650 |
* These figures are audited.
F&C Commercial
Property Trust Limited
Condensed Consolidated Statement
of Cash Flows (unaudited)
for the six months to 30 June 2018
Notes |
Six months
to 30 June 2018 |
Six months to 30
June 2017 |
Year to
31 December
2017* |
|
|
£’000 |
£’000 |
£’000 |
Cash flows from
operating activities |
|
|
|
|
Profit for the period
before taxation |
|
40,828 |
55,300 |
93,413 |
Adjustments for: |
|
|
|
|
Finance costs |
|
5,450 |
5,445 |
10,932 |
Interest receivable |
|
(6) |
- |
(72) |
Unrealised gains on
revaluation of investment properties |
5 |
(20,971) |
(35,502) |
(52,854) |
Losses on sale of investment
properties realised |
|
- |
5 |
5 |
Increase in operating trade
and other receivables |
|
(490) |
(1,313) |
(3,204) |
(Decrease)/increase in
operating trade and other payables |
|
(872) |
(1,613) |
200 |
|
|
23,939 |
22,322 |
48,420 |
|
|
|
|
|
Interest received |
|
6 |
- |
72 |
Interest and bank fees paid |
|
(5,303) |
(5,229) |
(10,559) |
Taxation paid |
|
(227) |
(118) |
(203) |
|
|
(5,524) |
(5,347) |
(10,690) |
|
|
|
|
|
Net cash inflow from
operating activities |
|
18,415 |
16,975 |
37,730 |
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
Purchase of investment
properties |
5 |
(5,777) |
(1,640) |
(32,802) |
Capital expenditure of investment
properties |
5 |
(3,880) |
(1,380) |
(6,831) |
Net cash outflow from investing
activities |
|
(9,657) |
(3,020) |
(39,633) |
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
Dividends paid |
2 |
(23,981) |
(23,981) |
(47,962) |
Drawdown of Barclays
Loan revolving credit facility |
|
- |
- |
35,000 |
Repayment of Barclays
Loan revolving credit facility |
|
- |
- |
(35,000) |
Net cash outflow
from financing activities |
|
(23,981) |
(23,981) |
(47,962) |
|
|
|
|
|
Net decrease in cash and cash
equivalents |
|
(15,223) |
(10,026) |
(49,865) |
Opening cash and cash
equivalents |
|
35,156 |
85,021 |
85,021 |
Closing cash and cash
equivalents |
|
19,933 |
74,995 |
35,156 |
* These figures are audited
F&C Commercial
Property Trust Limited
Notes to the Consolidated
Financial Statements
for the six months to 30 June 2018
1. General
information and basis of preparation
The condensed consolidated financial statements have been
prepared in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom Financial Conduct
Authority and IAS 34 ‘Interim Financial Reporting’. The condensed
consolidated financial statements do not include all of the
information required for a complete set of IFRS financial
statements and should be read in conjunction with the consolidated
financial statements of the Group for the year ended 31 December 2017, which were prepared under full
IFRS as adopted by the European Union requirements. The accounting
policies used in the preparation of the condensed consolidated
financial statements are consistent with those of the consolidated
financial statements of the Group for the year ended 31 December 2017. These condensed interim
financial statements have been reviewed, not audited.
After making enquiries, and bearing in mind the nature of the
Company’s business and assets, the Directors consider that the
Company has adequate resources to continue in operational existence
for the next twelve months. In assessing the going concern basis of
accounting the Directors have had regard to the guidance issued by
the Financial Reporting Council. They have considered the current
cash position of the Group, forecast rental income and other
forecast cash flows. The Group has agreements relating to its
borrowing facilities with which it has complied during the period.
Based on the information the Directors believe that the Group has
the ability to meet its financial obligations as they fall due for
a period of at least twelve months from the date of approval of the
financial statements. For this reason they continue to adopt the
going concern basis in preparing the accounts.
These condensed interim financial statements were approved for
issue on 11 September 2018.
2.
Dividends
|
|
Six months to 30
June 2018 |
Six months to 30
June 2017 |
Year to 31 December
2017 |
|
|
£’000 |
£’000 |
£’000 |
|
In respect of the previous
period: |
|
|
|
|
Ninth interim (0.5p per share) |
3,997 |
3,997 |
3,997 |
|
Tenth interim (0.5p per share) |
3,997 |
3,997 |
3,997 |
|
Eleventh interim (0.5p per
share) |
3,996 |
3,996 |
3,996 |
|
Twelfth interim (0.5p per
share) |
3,997 |
3,997 |
3,997 |
|
|
|
|
|
|
In respect of the
period
under review: |
|
|
|
|
First interim (0.5p per
share) |
3,997 |
3,997 |
3,997 |
|
Second interim (0.5p per share) |
3,997 |
3,997 |
3,997 |
|
Third interim (0.5p per
share) |
- |
- |
3,996 |
|
Fourth interim (0.5p per
share) |
- |
- |
3,997 |
|
Fifth interim (0.5p per
share) |
- |
- |
3,997 |
|
Sixth interim (0.5p per
share) |
- |
- |
3,997 |
|
Seventh interim (0.5p per
share) |
- |
- |
3,997 |
|
Eighth interim (0.5p per
share) |
- |
- |
3,997 |
|
|
23,981 |
23,981 |
47,962 |
A third interim dividend for the year to 31 December 2018, of 0.5
pence per share totalling £3,997,000 was paid on
31 July 2018. A fourth interim
dividend of 0.5 pence per share will
be paid on 31 August 2018 to
shareholders on the register on 10 August
2018. A fifth interim dividend of 0.5
pence per share will be paid on 28
September 2018 to shareholders on the register on
14 September 2018. Although these
payments relate to the period ended 30 June
2018, under IFRS they will be accounted for in the period
during which they are declared.
It is the Directors’ intention that the Company will continue to
pay dividends monthly.
3. Other
expenses
|
|
Six months to 30
June 2018 |
Six months to 30
June 2017 |
Year to 31 December
2017 |
|
|
£’000 |
£’000 |
£’000 |
|
Direct operating expenses of rental
property |
2,069 |
1,973 |
4,208 |
|
Surrender premium |
613 |
- |
- |
|
Valuation and other professional
fees |
207 |
213 |
417 |
|
Directors’ fees |
145 |
157 |
296 |
|
Administration fee |
74 |
73 |
148 |
|
Depositary fee |
86 |
82 |
166 |
|
Other |
267 |
201 |
424 |
|
|
3,461 |
2,699 |
5,659 |
The basis of payment for the Directors’ and investment
management fees are detailed within the consolidated financial
statements of the Group for the year ended 31 December 2017.
4. Earnings per
share
The Group’s basic and diluted earnings per Ordinary Share are
based on the profit for the period of £39,957,000 (period to
30 June 2017: £54,835,000;
31 December 2017: £92,710,000) and on
799,366,108 (period to 30 June 2017:
799,366,108; 31 December 2017:
799,366,108) Ordinary Shares, being the weighted average number of
shares in issue during the period. Earnings for the six months to
30 June 2018 should not be taken as
guide to the results for the year to 31
December 2018.
5. Investment
properties
|
Six months to 30
June 2018 |
Six months to 30
June 2017 |
Year to 31 December
2017 |
|
£’000 |
£’000 |
£’000 |
Freehold and leasehold
properties |
|
|
|
Opening book cost |
990,454 |
950,416 |
950,416 |
Opening unrealised appreciation |
408,440 |
355,586 |
355,586 |
Opening fair value |
1,398,894 |
1,306,002 |
1,306,002 |
Purchase of investment
properties |
5,532 |
1,640 |
33,212 |
Loss on sale |
- |
(5) |
(5) |
Capital expenditure |
3,880 |
1,380 |
6,831 |
Unrealised gains on investment
properties |
31,353 |
45,667 |
68,267 |
Unrealised losses on investment
properties |
(10,382) |
(10,165) |
(15,413) |
|
1,429,277 |
1,344,519 |
1,398,894 |
|
|
|
|
Closing book cost |
999,866 |
953,431 |
990,454 |
Closing unrealised appreciation |
429,411 |
391,088 |
408,440 |
Closing fair value |
1,429,277 |
1,344,519 |
1,398,894 |
The fair value of investment properties reconciled to the
appraised value as follows:
|
Six months to 30
June 2018 |
Six months to 30
June 2017 |
Year to 31 December
2017 |
|
£’000 |
£’000 |
£’000 |
Appraised value of CBRE |
1,450,035 |
1,363,335 |
1,418,612 |
Lease incentives held as
debtors |
(20,758) |
(18,816) |
(19,718) |
Closing fair value |
1,429,277 |
1,344,519 |
1,398,894 |
There were no properties held for sale at 30 June 2018 (2017: none).
All the Group’s investment properties were valued as at
30 June 2018 by RICS Registered
Valuers working for the company of CBRE Limited (‘CBRE’),
commercial real estate advisors, acting in the capacity of a
valuation adviser to the AIFM. All such valuers are Chartered
Surveyors, being members of the Royal Institution of Chartered
Surveyors (‘RICS’).
CBRE completed the valuation of the Group’s investment
properties at 30 June 2018 on a fair
value basis and in accordance with The RICS Valuation –
Professional Standards UK January
2017.
There were no significant changes to the valuation process,
assumptions and techniques used during the period, further details
on which were included in note 8 of the consolidated financial
statements of the Group for the year ended 31 December 2017.
As at 30 June 2018, all of the
Group’s properties are Level 3 in the fair value hierarchy as it
involves the use of significant unobservable inputs and there were
no transfers between levels during the period. Level 3 inputs used
in valuing the properties are those which are unobservable, as
opposed to Level 1 (inputs from quoted prices) and Level 2
(observable inputs either directly i.e. as priced, or indirectly,
i.e. derived from prices).
6. Share
capital
|
|
|
£’000 |
Allocated, called-up and fully
paid |
|
|
|
799,366,108 Ordinary Shares of 1p
each in issue at 30 June 2018 |
|
|
7,994 |
Under the Company’s Articles of Incorporation, the Company may
issue an unlimited number of Ordinary Shares. The Company issued
nil Ordinary Shares during the period (2017: nil) raising net
proceeds of £nil (2017: £nil).
The Company did not repurchase any Ordinary Shares during the
period.
7. Net asset value
per share
The Group’s net asset value per Ordinary Share of 143.2p
(30 June 2017: 139.4p; 31 December 2017: 141.2p) is based on equity
shareholders’ funds of £1,144,941,000 (30
June 2017: £1,114,584,000; 31
December 2017: £1,128,650,000) and on 799,366,108
(30 June 2017: 799,366,108;
31 December 2017: 799,366,108)
Ordinary Shares, being the number of shares in issue at the period
end.
8. Capital
commitments
The Group had capital commitments totalling £10,300,000 as at
30 June 2018 (30 June 2017: £1,625,000; 31 December 2017: £6,800,000). These commitments
related mainly to contracted development works at the Group’s
properties at Cassini House, London SW1 and Nevis/Ness Houses, Edinburgh.
9. List of
Subsidiaries
The Group results consolidate the results of the following
companies:
-
FCPT Holdings Limited (the parent company of F&C Commercial
Property Holdings Limited and Winchester Burma Limited)
-
F&C Commercial Property Holdings Limited (a company which
invests in properties)
-
SCP Estate Holdings Limited (the parent company of SCP Estate
Limited and Prime Four Limited)
-
SCP Estate Limited (a company which invests in properties)
-
Prime Four Limited (a company which invests in properties)
-
Winchester Burma Limited (a company which invests in
properties)
-
Leonardo Crawley Limited (a company which invests in
properties)
All of the above named companies are registered in Guernsey.
The Group’s ultimate parent company is F&C Commercial
Property Trust Limited.
10. Subsequent events
There are no material subsequent events that need to be
disclosed.
11. Forward looking
statements
Certain statements in this report are forward looking
statements. By their nature, forward looking statements involve a
number of risks, uncertainties or assumptions that could cause
actual results or events to differ materially from those expressed
or implied by those statements. Forward looking statements
regarding past trends or activities should not be taken as
representation that such trends or activities will continue in the
future. Accordingly, undue reliance should not be placed on forward
looking statements.
Statement of Principal Risks and
Uncertainties
The Company’s assets comprise mainly of direct investments in UK
commercial property. Its principal risks are therefore related to
the commercial property market in general. Other risks faced by the
Company include market, geopolitical, investment and strategic,
regulatory, environmental, taxation, management and control,
operational, and financial risks. The Company is also exposed to
risks in relation to its financial instruments. These risks, and
the way in which they are managed, are described in more detail
under the heading ‘Principal Risks and Risk Management’ within the
Business Model and Strategy in the Company’s Annual Report for the
year ended 31 December 2017. The
Company’s principal risks and uncertainties have not changed
materially since the date of that report and are not expected to
change materially for the remainder of the Company’s financial
year.
Statement of Directors’
Responsibilities in Respect of the Interim Report
We confirm that to the best of our knowledge:
•
the condensed set of consolidated financial statements has been
prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as
adopted by the European Union;
•
the Chairman’s Statement and Managers’ Review (together
constituting the Interim Management Report) together with the
Statement of Principal Risks and Uncertainties above include a fair
review of the information required by the Disclosure and
Transparency Rules (‘DTR’) 4.2.7R, being an indication of important
events that have occurred during the first six months of the
financial year and their impact on the condensed set of
consolidated financial statements; and
•
the Chairman’s Statement together with the condensed set of
consolidated financial statements include a fair review of the
information required by DTR 4.2.8R, being related party
transactions that have taken place in the first six months of the
current financial year and that have materially affected the
financial position or performance of the Company during that
period, and any changes in the related party transactions described
in the last Annual Report that could do so.
On behalf of the Board
Chris
Russell
Director
F&C Commercial
Property Trust Limited
Independent Review Report
to the Directors of F&C Commercial Property Trust
Limited
Our conclusion
We have reviewed the accompanying condensed consolidated interim
financial information of F&C Commercial Property Trust Limited
(the “Company”) and its subsidiaries (together the “Group”) as of
30 June 2018. Based on our review,
nothing has come to our attention that causes us to believe that
the accompanying condensed consolidated interim financial
information is not prepared, in all material respects, in
accordance with International Accounting Standard 34, ‘Interim
Financial Reporting’, as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority.
What we have reviewed
The accompanying condensed consolidated interim financial
information comprise:
•
the condensed consolidated balance sheet as of 30 June 2018;
•
the condensed consolidated statement of comprehensive income for
the six-month period then ended;
•
the condensed consolidated statement of changes in equity for the
six-month period then ended;
•
the condensed consolidated statement of cash flows for the
six-month period then ended; and
•
the notes, comprising a summary of significant accounting policies
and other explanatory information.
The condensed consolidated interim financial information has
been prepared in accordance with International Accounting Standard
34, ‘Interim Financial Reporting’, as adopted by the European Union
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom’s Financial Conduct Authority.
Our responsibilities and those of the
Directors
The Directors are responsible for the preparation and
presentation of this condensed consolidated interim financial
information in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom’s Financial
Conduct Authority.
Our responsibility is to express a conclusion on this condensed
consolidated interim financial information based on our review.
This report, including the conclusion, has been prepared for and
only for the Company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of interim financial
information performed by the independent auditor of the entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
Alternative Performance Measures
The Company uses the following
Alternative Performance Measures (‘APMs’). APMs do not have a
standard meaning prescribed by GAAP and therefore may not be
comparable to similar measures presented by other entities.
Discount or Premium – the share price
of an Investment Company is derived from buyers and sellers trading
their shares on the stock market. If the share price is lower than
the NAV per share, the shares are trading at a discount. This
usually indicates that there are more sellers than buyers. Shares
trading at a price above the NAV per share, are said to be at a
premium.
Dividend Cover – The percentage by
which Profits for the year (less gains/losses on investment
properties) cover the dividend paid.
A reconciliation of dividend cover is
shown below:
|
|
|
30 June
2018 |
30 June
2017 |
|
|
|
£’000 |
£’000 |
|
|
|
|
|
Profit for the period |
|
|
39,957 |
54,835 |
Add back: |
Unrealised gains on
revaluation of investment properties |
(20,971) |
(35,502) |
|
Losses on sales of
investment properties realised |
- |
5 |
Profit before investment
gains and losses |
|
18,986 |
19,338 |
Dividends |
|
|
23,981 |
23,981 |
Dividend Cover
percentage |
|
79.2 |
80.6 |
|
|
|
|
|
Dividend Yield – The annualised
dividend divided by the share price at the period-end. An analysis
of dividends is contained in note 2 to the accounts.
Net Gearing – Borrowings less cash
dividend by total assets (less current liabilities and cash)
Portfolio (Property) Capital Return –
The change in property value during the period after taking account
of property purchase and sales and capital expenditure, calculated
on a quarterly time-weighted basis.
Portfolio (Property) Income Return –
The income derived from a property during the period as a
percentage of the property value, taking account of direct property
expenditure, calculated on a quarterly time-weighted basis.
Portfolio (Property) Total Return –
Combining the Portfolio Capital Return and Portfolio Income Return
over the period, calculated on a quarterly time-weighted basis.
Total Return – The theoretical return
to shareholders calculated on a per share basis by adding dividends
paid in the period to the increase or decrease in the Share Price
or NAV. The dividends are assumed to have been reinvested in the
form of Ordinary Shares or Net Assets, respectively, on the date on
which they were quoted ex-dividend.
All enquiries to:
The Company Secretary
Northern Trust International Fund Administration Services
(Guernsey) Limited
Trafalgar Court
Les Banques
St. Peter Port
Guernsey GY1 3QL
Tel: 01481 745324
Fax: 01481 745051
Richard Kirby
BMO REP Asset Management plc
Tel: 0207 499 2244
Graeme Caton
Winterflood Securities Limited
Tel: 0203 100 0268
The full interim report for the period
to 30 June 2018 will be sent to
shareholders and will be available for inspection at Trafalgar
Court, Les Banques, St Peter Port, Guernsey GY1 3QL, the registered office of the
Company, and from the Company’s website: www.fccpt.co.uk